2 Best Tire Stocks to Own as Premium Makers Navigate Inflation Risks

UBS analysts have identified premium tire manufacturers as companies well-equipped to withstand the challenges posed by inflation. Among these firms, Continental has been singled out as the top choice, offering significant upside potential in the short term. The firm is projecting a 2026 fiscal year that exceeds expectations, driven by improvements in the Americas market and optimization efforts across other segments.

In the medium term, Continental is anticipated to return more than 20% of its market capitalization to shareholders by the first half of 2027. Currently, the stock is trading at a discount compared to its peers, presenting an attractive entry point.

Another tire maker receiving a "buy" rating from UBS is Pirelli. This Italian company has demonstrated strong performance recently and is set to benefit from a more favorable capital allocation strategy. This shift is expected to materialize following recent changes in its shareholder structure. UBS views Pirelli as an opportune investment, given its solid execution and potential for enhanced value creation.